Thursday, January 25, 2018

So Much For All That Talk About Tier 1, Tier 2, and Tier 3 Areas In The Bakken -- January 25, 2018

This link at Platts.
For years, large public companies have produced crude oil in North Dakota largely in an area known as "the core of the core" of the Bakken shale play. Faced with low, stagnant oil prices, the big producers have focused largely on drilling in McKenzie and Dunn counties, Fort Berthold Indian Reservation and other acreage within the southern portion of the Nesson Anticline.

But rising prices, along with the start of the Dakota Access Pipeline and well productivity improvements, have pushed new companies, mainly smaller operators backed by private equity firms, into acreage long ignored by the state's prominent producers.

While NYMEX WTI prices have nearly doubled over the past two years to around $65/b Wednesday, Bakken differentials have also been on the rise, especially over the past year. Bakken at the wellhead has averaged WTI minus $1.43/b so far in January, compared with discounts of close to $5/b back in January 2016, S&P Global Platts data shows.

Better prices have given drillers the opportunity to expand.

"What we would've considered a fringe area a year ago are now considered economic territory in the state of North Dakota," Justin Kringstad, director of the North Dakota Pipeline Authority, said last week during a conference call.

Relatively smaller operators, either unable or unwilling to acquire so-called Tier 1 acreage in the core of the core, are looking at less costly Tier 2 and even Tier 3 areas and considering adding rigs on the outskirts of the Bakken's most prolific plays. 
By the way, the absolute rig count is not so important as the number of operators drilling.

By the way, speaking of DAPL, I'm not going to post them, and I'm not going to link the stories, but a reader is sending me regular updates regarding trials and sentences of DAPL protestors. There are many guilty pleas and some of them getting stiffer sentences than the woman recently found guilty of intent to distribute heroin in Williston. The latter served 14 days in jail. Time served. So, once the judge accepted the guilty plea and laid down the sentence, she was released from prison.

And they say North Dakota is serious about illicit drugs. 

If you have nothing else to do, and I mean absolutely nothing else to do, you can be brought up to date regarding DAPL protests at this link. Deep into the article, this pearl:
An ebullient paralegal named Jess in gold eye-shadow and a floral skirt pointed out where the various camp areas had stood. She hadn’t returned to the site since the February eviction.
Nor had Dandilion Cloverdale, a sex worker and educator from Montana who now works for the Freshet Collective in North Dakota to coordinate travel and lodging for defendants. Cloverdale walked around solemnly, eyes streaming from the winds blowing sideways on the plains. “It’s sad coming back here, it looks so different” they said, adding “it’s hard,” a phrase I heard like a refrain that trip.
And yes, you can find a YouTube video featuring Dandilion Cloverdale.

What a great country.

I assume the "camp" looks "so different" is because it's been cleaned up at taxpayer's expense.

Unless Something Bigger Happens In The Next 48 Hours, This Is The Biggest Bakken Story Of The Week -- January 25, 2018

Link here to Rigzone.
Hess Midstream Partners LP and Targa Resources Corp. have formed a 50/50 joint venture to build a new 200 million standard cubic feet per day dry gas processing plant near Targa’s existing Little Missouri facility in McKenzie County, North Dakota, Hess Midstream announced Thursday.

“The Little Missouri Four Gas Processing Plant demonstrates our commitment to executing our strategy by providing additional Bakken basin processing capacity, which provides another layer of organic growth to meet our long-term targeted annual distribution per unit growth,” John Gatling, Hess Midstream’s chief operating officer, said in a company statement. “By executing infrastructure projects that provide more optionality to producers, Hess Midstream expects to continue to capture additional Hess and third-party volumes, reinforcing the competitive advantage we enjoy from our strategically located infrastructure in the core of the Bakken.”

According to Hess Midstream, Targa will manage construction of the approximately $150 million Little Missouri Four (LM4) plant and operate the facility. Hess TGP Operations L.P. – owned on a 20/80 basis by Hess Midstream and Hess Infrastructure Partners LP (HIP), respectively – will hold Hess Midstream’s 50-percent stake in the gas plant, the company added. In addition to contributing a total of $75 million to the plant’s construction, Hess Midstream said the two Hess units will invest approximately $100 million toward new pipeline infrastructure to gather volumes to LM4.
Earlier this was posted:
Link here at The Bismarck Tribune. Data points:
  • Hess Midstream Partners
  • $150 million natural gas processing plant
  • partner: Targa Resources Corp
  • name: Little Missouri Four plan
  • capacity: 200 million cf/d
  • location: near Targa's existing facility south of the Missouri River near Watford City
  • completion date: by the end of this year
  • natural gas production in ND set a record in November, 2017: 2.1 billion cubic feet/day
  • flaring: still at 14%
  • one of four natural gas processing plants in the planning or construction stages in North Dakota
  • the four projects would add an additional 615 million cubic feet per day of additional processing capacity
  • ONEOK: to expand it Bear Creek natural gas processing plant north of Killdeer; will expand from a capacity of 80 million to 175 million cubic feet per day
  • Crestwood Equity Partners: expand the Arrow Bear Den gas processing plant near Watford City, adding another 120 million cfpd
  • Oasis Wild Basin processing plant it expanding to process 345 million cfpd in McKenzie CountyN
Note: if that is not an error in reporting, it seems that the Oasis expansion to 345 million cfpd is a huge addition; prior it was 80 at Plant 1; and 150 at Plant 2.
Note: it looks like a race among Hess, ONEOK and, Oasis to see who will have bragging rights to most natural gas processing capacity in the state.
Note: for newbies, this is a huge, huge story. The Bakken is an "oily" story, an "oily" play; no one expected this much natural gas activity back in 2007.

Headlines You Will See In The WSJ Friday Morning -- And Two You Won't -- January 25, 2018

Except for the last two, these are headlines taken from the on-line WSJ in advance of tomorrow's print edition.
  • Trump proposes "Dreamer" citizenship if wall gets funding
  • tax overhaul is roaring through companies
  • EPA withdraws air pollution policy
  • Trump descends on skeptical Davos
  • Siemens to lay off 202 workers at wind-turbine-blade plant in Iowa 
  • Idaho to allow new insurance plans outside of federal health law
  • UNP CEO: train braking technology is clogging the railway
  • Ford scoops up software firms as it drives toward the driverless
  • Tesla: a software company that wants to become a car company
  • Ford: a car company that wants to become a software company
People will disagree, of course, but it certainly seems that things are moving much more quickly under Trump than under Obama. Wow, we got a lot of speeches from Obama, but not much action. Just the opposite with Trump. Just saying.

Holy Mackeral -- It Never Quits -- Keeping North Dakota Great -- New Gas Processing Plant Planned For McKenzie County -- January 25, 2018

Link here at The Bismarck Tribune. Data points:
  • Hess Midstream Partners
  • $150 million natural gas processing plant
  • partner: Targa Resources Corp
  • name: Little Missouri Four plan
  • capacity: 200 million cf/d
  • location: near Targa's existing facility south of the Missouri River near Watford City
  • completion date: by the end of this year
  • natural gas production in ND set a record in November, 2017: 2.1 billion cubic feet/day
  • flaring: still at 14%
  • one of four natural gas processing plants in the planning or construction stages in North Dakota
  • the four projects would add an additional 615 million cubic feet per day of additional processing capacity
  • ONEOK: to expand it Bear Creek natural gas processing plant north of Killdeer; will expand from a capacity of 80 million to 175 million cubic feet per day
  • Crestwood Equity Partners: expand the Arrow Bear Den gas processing plant near Watford City, adding another 120 million cfpd
  • Oasis Wild Basin processing plant it expanding to process 345 million cfpd in McKenzie CountyN
Note: if that is not an error in reporting, it seems that the Oasis expansion to 345 million cfpd is a huge addition; prior it was 80 at Plant 1; and 150 at Plant 2.
Note: it looks like a race among Hess, ONEOK and, Oasis to see who will have bragging rights to most natural gas processing capacity in the state.
Note: for newbies, this is a huge, huge story. The Bakken is an "oily" story, an "oily" play; no one expected this much natural gas activity back in 2007.

Disclaimer: the table below is not entirely accurate. Much of the data in 2018 is projected for 2018 and later years; some of the numbers in 2018 are based on "plans" by operators, not necessarily what will be accomplished by year end. The NDIC has the official data.

Owner Company
Facility
County
2006
2008
2010
2011
2012
2013
2014
2015
2016
2017
2018
North Dakota













ONEOK/Bear Paw
Lignite
Burke
6
6
6
6
6
6
6
6
6
6
6
ONEOK/Bear Paw
Marmath
Slope
7.5
7.5
7.5
7.5
7.5
7.5
7.5
7.5
7.5
7.5
7.5
ONEOK
Grasslands
McKenzie
63
100
100
100
100
100
100
100
100
100
100
ONEOK
Stateline I
Williams
NA
NA
NA
NA
100
100
100
100
100
100
100
ONEOK
Stateline II
Williams
NA
NA
NA
NA
NA
100
100
100
100
100
100
ONEOK
Garden Creek I
McKenzie
NA
NA
NA
100
100
100
100
100
100
100
100
ONEOK
Garden Creek II
McKenzie
NA
NA
NA
NA
NA
NA
100
100
100
100
100
ONEOK
Garden Creek III
McKenzie
NA
NA
NA
NA
NA
NA
NA
120*
120
120
120
ONEOK
Lonesome Creek
McKenzie
NA
NA
NA
NA
NA
NA
NA
200
200
200
200
ONEOK
Demicks Lake
McKenzie
NA
NA
NA
NA
NA
NA
NA
NA
200*
Suspended: Feb 24, 2015

ONEOK
Bear Creek
Dunn
NA
NA
NA
NA
NA
NA
NA
NA
80*
80
80
Petro Hunt
Little Knife
Billings
32
32
32
32
32
32
32
32
32
32
32
True Oil
Red Wing Creek
McKenzie
4
4
4
4
4
10
10
10
10
10
10
Sterling Energy
Ambrose
Divide
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
EOG Resources
Stanley
Mountrail
NA
20
0*
0*
0*
0*
0*
0*
0*
0

Whiting Oil & Gas
Robinson Lake
Mountrail
NA
30
45
90
90
90
110
110
110
110
110
Whiting Oil & Gas
Ray
Stark
NA
10
NA
NA
NA
NA
10
10
10
10
10
Whiting Oil & Gas
Belfield
Williams
NA
NA
NA
30
30
35
35
35
35
35
35
XTO - Nesson
Ray
Williams
NA
10
10
10
10
10
10
10
10
10
10
Hess
Tioga
Williams
110
110
110
110
110
110
250
250
250
250
250
Hess Targa 
Little Missouri 4











200
Hiland Partners
Badlands
Bowman
4
40
40
40
40
40
40
40
40
40
40
Hiland Partners
Norse
Divide
NA
NA
25
25
25
25
25
25
25
25
25
Hiland Partners
Watford City
McKenzie
NA
NA
NA
50
90
90
90
90
90
90
90
Summit Resources
Knutson
Billings
NA**
NA**
NA**
NA**
NA**
NA**
NA**
NA**
NA**


Targa Resources
Badlands
McKenzie
NA
NA
NA
45
45
45
45
45
45
45
45
Targa Resources
Badlands
McKenzie
NA
NA
NA
NA
NA
NA
NA
200
200*
200
200
USG Midstream Bakken
DeWitt
Divide
NA
NA
NA
NA
NA
3
3
3
3
3
3
Caliber Midstream
Caliber Midstream
McKenzie
NA
NA
NA
NA
NA
10
10
10
10
10
10
Plains
Ross
Mountrail
NA
NA
NA
NA
NA
NA
75
75
175
175
175
Oasis
Wild Basin
McKenzie








80
80
345
Liberty Resources
Tioga
Williams








20
20
20
Crestwood 
Arrow Bear Den
McKenzie
NA
NA
NA
NA
NA
NA
NA
NA
NA
30
120
AUX Sable - Chicago, IL













AUX Sable - Chicago, IL
Prairies Ross
Mountrail
NA
NA
110
110
110
110
110
110
110
110
110


  
  




  



  




227
370
490
760
900
1024
1369
1769
1889
2199
2754



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Book Recommendation

If one wants to know more about the development of the US movie industry, I strongly recommend The Man Who Made the Movies: The Meteoric Rise and Tragic Fall of William Fox, Vanda Krefft, c. 2017. Fascinating book, extremely well-written, and incredibly detailed without being ponderous.

I have barely started it -- I have completed the first 128 pages of this 755-page book with an 150 pages of notes, bibliography, and index.

I am taking notes as I read the book and putting those notes at this site.